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Commonwealth of Massachusetts

The Governor's Budget Recommendation

Capital Outlay

Over the last five years, the Weld/Cellucci Administration has substantially reduced the rate of spending on capital projects throughout the Commonwealth. Two primary factors have necessitated this course: First, the expansion in long-term borrowing to remedy operating budget shortfalls under the previous administration has created lasting and significant constraints to further expansions in the capital spending program. Second is the simple fact that the Commonwealth's historic pace of capital spending was disproportionate to its growth in population and other resources. It is true that the public infrastructure requirements of the state are unique, and that the Massachusetts economy has historically possessed a strong capacity to sustain a large public capital program. But for too long, the citizens of Massachusetts have held the dubious distinction of having the second highest per capita debt burden of any state in the country. Moreover, the annual cost of debt service has put an inordinate strain on the Commonwealth's operating budget, greatly limiting our flexibility to decrease tax rates, or initiate new savings programs with significant early year costs. As a result of this situation, the Commonwealth is extremely limited in its ability to deal with decreases in the rate of revenue growth, much less respond to actual decreases in tax collections from one year to the next, such as occurred in the early 1990's.

To respond to this situation, the Weld/Cellucci Administration adopted a Five Year Capital Spending Plan which sought to manage the Commonwealth's capital construction program so that total outstanding debt did not increase by more than 2% each year. The Plan exceeded initial expectations as the growth rate in outstanding debt plummeted from 29% in Fiscal Year 1991 to 8% in Fiscal Year 1992 to 0% in Fiscal Year 1993. The Plan continued to check growth in outstanding debt, holding annual increases in a 0% to 2% range from Fiscal Year 1994 to Fiscal Year 1996. With the aggressive refinancing efforts of the State Treasurer to take advantage of unusually low interest rates, principal and interest payments on Commonwealth debt have increased by an annual average of only 1.7% from Fiscal Year 1993 to Fiscal Year 1996.

The Weld/Cellucci Administration has had to be extremely careful in deciding which capital projects to initiate. The focus has been on capital expenditures which would significantly enhance the economy, including roadway and rapid transit improvements; reduce the operating budget, such as human service facility consolidation; or substantially improve the ability of the Commonwealth to serve its citizens, such as courthouse renovations and improved computerization of the state's operations. A fourth priority area, increased prison capacity and efficiency, has been severely limited by the lack of capital authorizations for these purposes, notwithstanding several requests for such authorization.

The Weld/Cellucci Administration will continue to work within the limitations of the Commonwealth's high debt burden while ensuring that the Commonwealth's capital needs are met. The capital expenditure program will continue to improve and maintain our public lands, roads, bridges, and buildings to support the continued growth of the private sector. The Legislature's recent approval of funding for capital improvements to public higher education facilities was very important for this service area. However, other new capital authorizations are needed. The Weld/Cellucci Administration therefore awaits the Legislature's approval of a number of pending authorization requests, several of which are summarized on the following pages. The entire amount requested in these new authorizations will not, in many cases, be expended during the five year period covered by the Five Year Capital Spending Plan, but the assurance of funding availability is critical to the Commonwealth's operating agencies as they develop forward-thinking, long-term capital spending strategies.

An Act Providing for an Environmental Enhancement and Protection Program for the Commonwealth.

This legislation will provide $300 million of capital spending authority to enhance, expand, and protect the Commonwealth's environmental resources. The funds provided by this bill will also make possible the exploration of an alternative way to approach open space acquisition by using state assistance to leverage municipal and private open space investments.

Previous capital appropriations for open space acquisition are nearly exhausted. With these funds, the Executive Office of Environmental Affairs has acquired approximately 10,000 acres per year, for the past several years, for the benefit of our citizens. It is important to replenish these accounts promptly to ensure that the Commonwealth's continued progress in this area will not be disrupted. The funding proposed will be sufficient to continue the program at its past rate of acquisitions consistent with the Weld/Cellucci Administration's Five Year Capital Plan.

One provision of the legislation provides for the establishment of an innovative habitat restoration program to restore sites which have been altered or significantly degraded. Finally, the legislation provides funding for a Geographic Information System program to assist in open space planning activities.

Information Technology Bond Bill II.

This legislation authorizes $225 million of state capital expenditures, and will leverage significant additional sums from federal matching programs to substantially expand and enhance the Commonwealth's computer and information technology capacity. It is critical that the Commonwealth follow the lead of the private sector in utilizing modern information technology to increase productivity and enhance the quality of service we provide our citizens. At the same time, the new initiatives funded in this measure could potentially produce dramatic operating budget cost savings.

Projects financed by the first Information Technology Bond Bill have already recouped the initial investment made in that bill. Many other states have had similar positive results from their investments in information technology. Effective use of the computer and telecommunications technologies is one of the principal ways in which the Commonwealth can maintain and increase the level and quality of services provided to its citizens, while maintaining, or even decreasing the costs of these services.

The Executive Office for Administration and Finance, working through its Information Technologies Division, has identified candidate projects to be implemented from proposals prepared and promoted by operating departments and agencies. This is similar to the process which was used in implementing the first Information Technology Bond Bill.

An Act Relative to the Expansion, Upkeep, and Reinvestment in the Existing Correctional Facilities of the Commonwealth and the Counties, and the Facilities of the Department of Juvenile Justice.

This legislation will reinforce the Weld/Cellucci Administration's commitment to public safety by authorizing a $591 million capital plan to construct over 4,700 new and replacement cells for the state and county correctional systems and add 300 secure beds for juvenile offenders.

Consistent with the Weld/Cellucci Administration's Five Year Capital Plan, this legislation will provide the expenditure authority necessary to upgrade and improve our correctional facilities over the next five years. The plan includes:

This plan also underscores our commitment to the communities in which correctional facilities are located. The bill includes funding for a community grant program to compensate those cities and towns which agree to host a state facility.

An Act Relative to Compliance with Life Safety Codes, Remediation of Environmental Hazards, and the Preservation and Management of the Commonwealth's Real Property Assets.

The $166 million of capital funds requested in this legislation will be critical to the new Executive Office of Public Property's ability to maintain the Commonwealth's public buildings, and bring them into compliance with various federal and state requirements. This legislation will enable the Commonwealth to comply with sprinkler requirements for its high-rise buildings; environmental laws and regulations; the Americans with Disabilities Act; and prudent repair and maintenance schedules for state buildings.

The Commonwealth owns and operates over 5,000 buildings comprising more than 65 million square feet of space. Properties include state hospitals, courts, higher education institutions, correctional facilities, armories, and office buildings. This bill will replenish existing general repair accounts (which have been virtually depleted) for these facilities, as well as provide funds for sprinkler installation, which is required by law to be completed by December 31, 1997. In addition, this legislation funds remediation of serious environmental hazards on state-owned property identified by the "Clean State" program, including asbestos abatement and removal of leaking underground fuel storage tanks. It also makes funds available for preventive maintenance, demolition, and preparation of surplus property for redevelopment.

An Act Relative to the Revitalization and Development of the Commonwealth's Seaports and the Improvement of the Freight Access Within the Commonwealth.

This $306 million bond authorization represents a comprehensive plan designed to rebuild critical aspects of the Commonwealth's freight transportation infrastructure. This legislation will bring the ports of Massachusetts and its freight railroad system into the competitive mainstream of global business. The revitalization of the Commonwealth's freight railroads and seaports are inextricably linked, for in the absence of one, the other cannot thrive. This has not always been the case, but in the past ten years the proportion of goods being shipped intermodally has skyrocketed. The intermodal capability of Massachusetts's ports must be enhanced to avoid their relegation to marginal or local port status.

For international commerce to thrive, our seaports and rail lines must be modernized to today's contemporary standards of efficiency, capacity, and service. Access to our harbors, in dire need of dredging, is fundamentally important for Massachusetts to be considered a "port of call" for the next generation of deep water cargo ships. Similarly, the fact that we remain the only industrial state without "double-stack" rail access must change if Massachusetts businesses are to compete and expand their markets both domestically and worldwide.

Therefore, our proposal would fund the following broad categories:

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